1. Technical Field
The present invention relates in general to accounting software including personal finance managers and in particular to reconciliation of external statements with accounting software records. Still more particularly, the present invention relates to a method and apparatus for reconciling external statements to groups of transactions within accounting software records.
2. Description of the Related Art
Financial transactions are commonly recorded in data processing systems using software accounting packages. Examples include personal finance managers such as Quicken, Microsoft Money, and Minding Your Money. In such personal finance managers, users record transactions such as checks, deposits, and automatic teller machine withdrawals. The personal finance manager software typically includes functions for balancing accounts and reconciling the records to bank statements received by the user.
A problem arises in the reconciliation process where an external statement consolidates multiple transactions recorded separately in the accounting software. Often a deposit or other financial transaction is entered as multiple separate entries in a user's accounting software ledger. For example, a user with 10 checks to deposit will enter the checks individually in the ledger for auditing, tracking, budget management, and other reasons.
When the deposit is made at the financial institution, however, such as the user's bank or credit union, only one deposit entry is entered into the account for the total deposit amount. When reconciling the account, the account statement contains only a single deposit amount that does not match any deposit amount in the software ledger. The customer must manually total individual unmatched entries via calculator or hand calculation to determine which combination of multiple entries matches the single statement entry.
Another common situation where multiple transactions may be consolidated and create problems for account reconciliation is payment of invoices. Frequently businesses will pay several invoices received for goods or services with a single check, or may pay for specific items within an invoice rather than paying the entire invoice. The invoicing entity is then required to determine to which outstanding invoices or items within an invoice a received payment is to be applied.
A further, unrelated problem in personal finance managers arises from the limited capability of users to group transactions for special treatment. Most personal finance managers allow transactions to be categorized for the purposes of budgeting or expense tracking. For example, users may classify transactions as mortgage or auto payments for the purposes of viewing such categories separately as a portion of total expenses.
Generally, however, transactions may not be grouped independently of the categories for the purposes of detailed analysis. For example, a user may wish to group fixed recurring expenses, such as mortgage and auto payments, and variable recurring expenses, such as groceries and dry-cleaning, separately for the purposes of manipulating a monthly budget.
An additional consideration is introduced by the fact that personal finance managers are evolving. Traditional personal finance managers are designed to operate on standalone data processing systems with transactions manually entered and reconciled by the user, although some personal finance managers are beginning to offer support for electronically downloading transactions and partial reconciliation between local and bank ledgers. Additionally, banks are beginning to offer electronic services for accounts via dialup access, such as “PC Banking,” a service offered by NationsBank Corporation. Moreover, efforts are being made—by the consortium Integrion, for example—to establish electronic banking services over the Internet.
In view of the proliferation of such electronic banking services, it is anticipated that personal finance managers will be augmented to provide new features. One feature anticipated is more fully automated account reconciliation between a bank's records and a user's local account ledger. To provide such a feature, however, a mechanism for reliably correlating transactions should be established to minimize the user involvement required in the reconciliation.
It would be desirable, therefore, to provide a method and apparatus for facilitating reconciliation of external account statements or records with local accounting software ledgers where multiple entries may be consolidated within the external statement or records. It would further be advantageous to provide a method of grouping transactions within an accounting software ledger for purposes other than account reconciliation.